Travel takes off again in 2026, with AI now an imperative
Following a somewhat disappointing 2025, this year will see more growth in the U.S. travel sector, supported by a strong medium-term outlook and stronger demand. From agentic search to generative planning tools that aid in planning and booking, AI will a major part of the next cycle of competitiveness in travel, according to a report from OC&C Strategy Consultants.
The research also shows that AI is beginning to reshape the rules of competition. From discovery and planning through to booking and distribution, AI is challenging traditional sources of competitive advantage.
Multiple sources predict that U.S. travel is very likely to rebound to a growth pattern in 2026, following a significant slow down in 2025. That comes as trends point to more consumer spending on experience rather than physical goods and more personalized travel plans that often focus on ‘authentic’ experiences and off-the-beaten-path destinations.
The 2025 calendar year marked a clear slowdown for U.S. travel following a strong recovery from the pandemic crash in 2020. Overall market growth moderated to approximately 1% or 2%, with domestic and inbound international travel experiencing the sharpest pressure.
Domestic air passenger volumes flattened, and inbound international travel suffered in nearly every month of the year. This softness impacted multiple sectors, as hotel chains saw occupancy rates decline and experience providers reported flat or softening booking momentum.
This downturn did not reflect a loss of consumer appetite but rather a spike in macroeconomic and geopolitical uncertainty. Factors such as tariff announcements, trade tensions, and stock market volatility made consumers more cautious about discretionary spending. Instead of abandoning travel, many consumers postponed trips, shortened their stays, or traded down to more affordable options.
Despite these challenges, the structural case for travel remains intact. Multiple forecasts anticipate U.S. travel spending will grow by approximately 3% to 6% annually between 2025 and 2028, matching pre-pandemic trends.
Experience-focused travel and luxury
This confidence is rooted in long-term behavioral shifts, as consumers continue to reallocate spending from goods to experiences. Premiumization also remains a powerful force, with travelers increasingly choosing upgrades and exclusive activities. Additionally, the persistence of remote and hybrid work supports blended leisure and business travel, enabling more frequent and longer stays.
While the overall outlook is positive, certain categories are better positioned to outperform. The cruise industry is a standout example, as operators continued to grow ahead of the broader market even during the 2025 slowdown.
With only 5% of Americans cruising each year, compared to more than 80% taking leisure trips, significant room for expansion remains. Luxury travel is also outperforming, with premium airline cabins and luxury hotel brands delivering stronger revenue growth than mass-market counterparts.
Growing importance of AI
Alongside this recovery, AI has begun reshaping the industry. On the back end, automation of customer service and operational processes is becoming standard. On the front end, AI-driven personalization and planning tools are transforming how travelers discover and book trips. While this technology introduces risks of disintermediation for some, businesses with exclusive inventory, strong brands, and high-touch service remain more defensible.
Going forward, travel operators will need to adapt, prioritizing investment in exclusive content, playing into luxury and experiential demand, and rethinking distribution to account for AI-driven search.
"The turbulence of 2025 now appears to be waning with tailwinds forecast through 2026 for U.S. travel, supported by enduring demand and attractive growth hotspots," Phil Hunt, partner with OC&C Strategy Consultants.
"However, the next phase will not fuel all operators equally. Travel operators that adapt their strategies to premium demand, invest in defensibility and respond decisively to AI-driven disruption will be best placed to capture the next wave of growth."
